I have taken a company and am doing a Financial Analytical Review… I have taken a company and am doing a Financial Analytical Review on it. All these calculations don’t look good to me, am I miss interpreting them or can you help me understand why a company doesn’t have good ratios? All numbers taken out of Rogers Communications 2021 Annual Report. https://investors.rogers.com/2021-annual-report/Financial Ratio Calculations (December 2021)Liquid Ratio1. Current ratio = Current Assets / Current Liabilities = 5,829 (million) / 8,619 (million) = 0.676297 This shows that Rogers is not able to pay off short-term liabilities with their assets. Rogers is not able to cover it’s short-term obligations using only cash and cash equivalents. 2. Quick Ratio = Cash and Cash Equivalents + Marketable Securities + Accounts Receivable / Current Liabilities = 715 (million) + 1,581 (million) + 3,847 (million) / 8,619 (million) = 6,149 / 8619 = 0.712728Rogers again score is low it should be any number 1.0 or greater, to prove it can pay of its liabilities. 3. Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities = 5,626 (million) / 8,619 (million) = 0.652744This shows that Rogers is able to pay off its current liabilities with the cash generated at 0.6527 a year. Profitability Ratio1. Gross margin ratio = Gross profit / Net sales = 2,127 (million) / 2,161 (million) = 0.984267Rogers shows that it doesn’t make a profit after paying it’s cost of goods sold. 2. Return on Assets Ratio = Net Income / Total Current Assets = 1,558 (million) / 5,829 (million) = 0.267284Rogers is not efficiently using its assets to generate profit. 3. Return on equity = Net income / Shareholder’s Equity = 1,558 (million) / 10,532 (million) = 0.147930Rogers is not efficiently using equity to generate profitSolvency Ratios1. Debt to Equity Ratio = Total Liability’s / Shareholders Equity = 31,431 (million) / 10,532 (million) = 2.984333Rogers has a high debit to equity ratio which would mean it is a risky company to invest in. 2. Long Term Debt to Equity Ratio = Long- term Debt / Shareholders Equity = 17,137 (million) / 10,532 (million) = 1.627136Rogers Long-term debt to equity ratio is slightly above good what I considered good (1 to 1.5). 3. Financial Leverage Ratio = Total Assets / Shareholders Equity = 41,963 (million) / 10,532 (million) = 3.984333Rogers financial leverage ratio shows for every $1.00 in Equity it owes $3.98 in debt.4. Proprietary Ratio = Shareholders Equity / Total Assets = 10,532 (million) / 41,963 (million) = 0.250983This shows that Rogers has 25% of its funds being supplied by outside creditors. This is lower then what a company should want their investors to feel comfortable investing with them. Business Finance
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